The Key Point In The Budget 2017-18 For Calculation Of Capital Gains The Base Year is Shifted From 1981-82 To 2001-02. Now The Question Arises That On Shifting The Base Year The Tax Payers Will Have To Pay More Tax /Less Tax Or Shall Have No Effect In Terms Of Long Term Capital Gain.
(This Is What I Think)
1. If Anybody Has Purchased The Land Prior To Fin Year 2001-02 Then The Cost Of Land Will Be Taken As FMV Or Circle Rate Of That Land As On 01/April/2001 And Indexation Will Be Calculated Accordingly At That Price (As On 01/04/2001)
2. If Any One Has Purchased Land After 2001-02 Then The Indexation Cost Will Be Calculated According To New CII Values (Not Yet released By CBDT).
Now Look At The Chart Below Since We Cannot Change The Inflation Rate During These Years Then 100 As CII For Base Year 2001-02. The Values For The Fin Year Respectively Will Be As Shown In Column 04 Of The Table.
|
NEW CII ACCORDING TO ME |
||||
|
S No |
Fin Year |
CII(Base Year) |
Inflation (%) |
|
|
1981-82 |
2001-02 |
|||
|
1 |
2001-02 |
426 |
100 |
- |
|
2 |
2002-03 |
447 |
105 |
4.93 |
|
3 |
2003-04 |
463 |
109 |
3.58 |
|
4 |
2004-05 |
480 |
113 |
3.67 |
|
5 |
2005-06 |
497 |
117 |
3.54 |
|
6 |
2006-07 |
519 |
122 |
4.43 |
|
7 |
2007-08 |
551 |
129 |
6.17 |
|
8 |
2008-09 |
582 |
137 |
5.63 |
|
9 |
2009-10 |
632 |
148 |
8.59 |
|
10 |
2010-11 |
711 |
167 |
12.50 |
|
11 |
2011-12 |
785 |
184 |
10.41 |
|
12 |
2012-13 |
852 |
200 |
8.54 |
|
13 |
2013-14 |
939 |
220 |
10.21 |
|
14 |
2014-15 |
1024 |
240 |
9.05 |
|
15 |
2015-16 |
1081 |
254 |
5.57 |
|
16 |
2016-17 |
1125 |
264 |
4.07 |
Illustration: Assuming That 'A' Is Below 60 Years (No Other Deduction Taken i.e. Brokerage, Improvement)
When Base Year Was 1981-82
Case 1:- Purchased Prior To Fin Year 2001-02
|
Purchase |
Sale |
|
Fin Year 1984-85 |
Fin Year 2016-17 |
|
1,00,000 |
20,00,000 |
|
Calculation Of Capital Gain |
|
|
Net Sale Consideration |
20,00,000 |
|
Indexed Cost Of Acquisition |
9,00,000 (i.e. 1,00,000*1125/125) |
|
Net Capital Gain |
11,00,000 (i.e. 20,00,000-9,00,000) |
|
Tax |
1,70,000 (i.e. 20% Of 11,00,000-2,50,000) |
Case2:- Purchased After Fin Year 2001-02
|
Purchase |
Sale |
|
Fin Year 2002-03 |
Fin Year 2016-17 |
|
1,00,000 |
20,00,000 |
|
Calculation Of Capital Gain |
|
|
Net Sale Consideration |
20,00,000 |
|
Indexed Cost Of Acquisition |
2,51,680 (i.e. 1,00,000*1125/447) |
|
Net Capital Gain |
17,48,320 (i.e. 20,00,000-2,51,680) |
|
Tax |
2,99,664 (i.e. 20% Of 17,48,320-2,50,000) |
Shifting Base Year To 2001-02
Case1:-Purchased Prior To Fin Year 2001-02
|
Purchase |
Sale |
|
Fin Year 1984-85 |
Fin Year 2016-17 |
|
1,00,000 |
20,00,000 |
|
Now Suppose The FMV Or Circle Rate Of That Land On 01/04/2001 was 5,00,000 |
|
|
Calculation Of Capital Gain |
|
|
Net Sale Consideration |
20,00,000 |
|
Indexed Cost Of Acquisition |
13,20,000 (i.e. 5,00,000*264/100) |
|
Net Capital Gain |
6,80,000 (i.e. 20,00,000-13,20,000) |
|
Tax |
86000 (i.e. 20% Of 6,80,000-2,50,000) |
Case2:- Purchased After Fin Year 2001-02
|
Purchase |
Sale |
|
Fin Year 2002-03 |
Fin Year 2016-17 |
|
1,00,000 |
20,00,000 |
|
Calculation Of Capital Gain |
|
|
Net Sale Consideration |
20,00,000 |
|
Indexed Cost Of Acquisition |
2,51,428 (i.e. 1,00,000*264/105) |
|
Net Capital Gain |
17,48,572(i.e. 20,00,000-2,51,428) |
|
Tax |
2,99,715(i.e. 20% Of 17,48,572-2,50,000) |
It Is Clear From The Illustration That Tax Payers Whose Asset Is Prior To 2001-02 Will Have To Pay Less Tax In Many Cases But Whose Asset Is After Fin Year 2001-02 Will Have To Pay Little More Taxes.
(This Is My Own View It May Be Right Or Wrong)
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